The much awaited decision on Wednesday evening by the CCEA on the Cairn–Vedanta deal turned out to be an anti-climax.
With the matter now being referred to a Group of Ministers (GoM), the Government has again postponed taking a clear position on the deal .
A good seven months after the takeover of Cairn India by the Vedanta Group was proposed, the uncertainty over which way the needle will turn, still continues.
However, given the near-unanimous stand articulated by major ministries, including the Oil Ministry and the Law Ministry, that royalty paid by ONGC should be cost-recoverable, the scales seem tilted against the deal. At least in the form envisaged by the Cairn-Vedanta combine.
In this context, both the options suggested by the Oil Ministry (sort pending issues before approval, approve now and then sort issues) may provide little respite to the Cairn-Vedanta combine.
A cost-recoverable treatment for royalty will likely see Cairn India's bottom-line take a big hit. Whether this becomes the deal-breaker remains to be seen.
The latest twist in the tale also raises questions about the proposed open offer by Sesa Goa (a Vedanta group company) to Cairn India's shareholders.
Earlier yesterday, the company had announced the long-awaited SEBI approval for the open offer. Interestingly however, Sesa Goa hedged its position, saying that the acquisition of stake in Cairn India by Vedanta was conditional upon Government consent.
With consent not yet coming, the likelihood of an open offer commencing on April 11, as envisaged, seems remote.
Amidst the uncertainty, what is reasonably clear is that there is little chance the April 15 deadline set by Cairn Energy and Vedanta for deal closure will be met.
The markets seem to have got a whiff of the impending travails regarding the deal closure.
The stock of Cairn India, which had a strong run over the past few days on the back of rising crude oil prices, dipped almost 4 per cent in Wednesday's trade. It closed at Rs 351, below the open offer price of Rs 355.